Checking stamp duty on a client's key contracts
How an audit or year-end review tests whether a Nigerian client's loans, leases and property deeds were stamped, and what to do with unstamped ones.
By Achekam · · 5 min read · For Accountants & audit firms in Nigeria
Stamp duty is easy to overlook in an audit. It rarely moves the profit much, and the documents that attract it, such as loan agreements, leases and property transfers, are usually examined for other reasons: to confirm terms, measure a lease or test a borrowing. Yet whether those documents were stamped affects two things the auditor does care about: whether the client can rely on them if a dispute arises, and whether there is an unrecorded liability for duty and penalties.
This article sets out a practical stamp duty check for Nigerian audits and year-end reviews, based on what the Nigeria Revenue Service and the Lagos State Internal Revenue Service have published.
Why stamping matters to the audit
The NRS says an unstamped dutiable instrument is not admissible as evidence in court, judicial or arbitration proceedings or to satisfy any evidentiary requirement, although it may be given in evidence in a criminal proceeding. Its Information Circular No. 2026/04 on dutiable instruments, published on 29 June 2026, sets out the rules this check relies on.
For the auditor, admissibility bears on the client's ability to enforce a contract. A lender relying on an unstamped security document, or a landlord relying on an unstamped lease, may find the document cannot be put before a court. Separately, the LIRS says failing to stamp a dutiable instrument attracts a penalty of 10% of the unpaid stamp duty plus interest at the Central Bank of Nigeria monetary policy rate. A client with unstamped instruments may therefore carry a liability its books do not show.
The thirty-day rule
The NRS says every instrument executed in Nigeria must be stamped not later than 30 days after its execution by the person obligated to pay the duty. The persons liable for each kind of instrument are listed in the Ninth Schedule to the Nigeria Tax Act 2025 and in the circular's own schedule.
The test for each document sampled is therefore simple to state: when was it executed, when was it stamped, and was the client the party liable to pay?
Loans, property transfers and agreements to sample
The circular helps the auditor choose what to sample.
On borrowings, the NRS says loan capital of a company is charged ad valorem stamp duty payable by the beneficiary of the disbursement, excluding overdrafts, loans for a period of not more than twelve months and loans obtained for onward lending to another person. Its worked example applies 0.125% to a debenture of 2 billion, giving duty of 2.5 million; the circular shows these amounts without a currency sign. So the client's longer-term borrowings are in scope, and its overdraft is not.
On property, the NRS says a transfer of interest or rights in real property is subject to stamp duty as a conveyance on sale, payable by the transferee. It excepts property valued at ₦10,000,000 or less, and transfers between associated companies holding at least 90% shareholding in each other, or through a third party, where the instrument was stamped when the property was first purchased. The circular's illustration applies ad valorem duty at 1.5% to land worth 15 million, giving duty of 225,000, payable by the transferee.
Where the stamping is done also matters. The LIRS FAQs say instruments between individuals and non-corporate entities are stamped by the LIRS at State level, instruments involving corporate bodies are stamped by the NRS at Federal level, and stamp duty on a land transaction must be paid in the State where the land is located. For a client that bought land outside the State where it is based, check where the duty was paid, because the FAQ ties land transactions to the State where the land lies.
Using the lease register and contract files
Most of the documents to test are already on the audit file for other reasons. In Achekam, staff can keep a client's lease register under IFRS 16 or IFRS for SMEs Section 20, and an AI draft of a lease read from the contract is not used until a person confirms it. The lease register is a ready-made population: for each lease, the reviewer can check whether the contract on file shows evidence of stamping and when, alongside the terms already confirmed. More on the register itself is in keeping a lease register under IFRS 16.
The contracts themselves belong in the client's folder in the Document Centre, where staff upload files, keep versions, tag and search. A tag for "stamped" and "not stamped" on each loan agreement, lease and deed makes the population easy to count and easy to roll forward next year.
Raising a finding and proposing an adjustment
Where a document is unstamped, or stamped late, the working paper should record it as a finding. In Achekam, findings can be raised from a working paper and closed or withdrawn, and lead schedules are built from the engagement's trial balance with each figure traceable to its lines. Staff can record an audit adjustment on a line with a reason.
The adjustment question is whether the client has a present obligation for duty, the 10% penalty and interest that it has not provided for. The circular's rates, its illustrations and the LIRS penalty give the basis for an estimate; the client's lawyers may need to confirm which party is liable on a complex transaction.
| Document | Who pays the duty | What to check |
|---|---|---|
| Long-term loan or debenture | The beneficiary of the disbursement | Stamped within 30 days; excluded if an overdraft or short-term |
| Property transfer | The transferee | Stamped, unless an exception applies; paid in the State where the land lies |
| Lease | As listed in the Nigeria Tax Act schedule | Evidence of stamping on the contract |
Reporting to the client
Unstamped documents are best raised early, while the client can still stamp them and limit the penalty and interest. A management letter point should name each document, its execution date, the duty position and the consequence for enforceability. Where the amounts are material, the finding also belongs in the discussion of adjustments with those charged with governance. The wider consequences are set out in what happens to unstamped documents.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
